Shipping options - flat rates, categories & variable handling fees

I've got a couple of questions on customizing the shipping options. If I have the following categories:

A: ship with live rates, handling fee flat $5 per order in this categoryB: ship with flat fee of $10, handling fee flat $8 per order in this categoryC: ship with flat fee of 15, handling fee of $3 per order in this category

If i'm reading the docs correctly, that means if I place an order products from all three categories, the shipping will be the live rate + $10 for cat B + $15 for cat C and a handling fee of $16 (total of all three) - is that right?

Is there any way to overwrite this so that we can use the most expensive of the 3 options rather than a combined rate?

Your summation is correct - the total shipping and handling cost would be a combination of all three. There isn't an in-built way to make it be the most expensive of the three - you would need to build out a custom shipping set up using some of our snippets to achieve that: http://wiki.foxycart.com/v/2.0/snippets

For what you've described - mixing live rates and flat rates - you would need to move to using the live rates snippet modification, and change to calculating the flat rate pricing within the javascript snippet directly. You wouldn't set the flat rates from the admin at all - instead all your categories would be live rates and depending on the category you'd assign different shipping rates (either the live rates or your own custom flat rates added through the snippet) on the checkout.